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26 Aug, 2025 12:21

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Ujjivan Small Finance Bank (USFB) is mass-market focused Small Finance bank in India, catering to unserved and underserved segments. USFB’s Promoter, Ujjivan Financial Service Ltd (UFSL) commenced operations as a NBFC in 2005. UFSL’s business was primarily based on the joint liability group-lending model for providing collateral free, small ticket-size loans. As of September 30, 2019, USFBs’ operations spread across 24 States and Union Territories with 552 banking outlets and 441 ATMs. It has a diversified portfolio with Advances at Rs 12,864 cr and Deposits at Rs 10,130 cr. The bank offers wide range of products and services, with particular focus on micro banking, SME & Retail loans.

At the upper price band of Rs 37, the stock is offered at 2.3x P/BV (post issue), which we believe is at significant discount to its peers. Management’s focus on mass-market segment by focusing on Non-MFI segment and garnering retail deposits will aid into USFB’s performance. The key positive factors for USFB are good promoter background, adequately capitalized and high yielding businesses like MFI loans. Bank is getting listed mainly to meet the RBI guidelines with fresh issue of Rs 750 cr, which further improves its capital position. The bank has also shown significant improvement in asset quality. We recommend investors to subscribe to the issue from a longer term perspective. We have a three star rating on the issue.

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